Software as a service, and some thoughts on the future

Some years ago I participated in a research project  in which we examined the future of software; even then, in the mid-1990s, it was apparent that change was afoot. The software industry was oriented towards the needs of developers rather than users and was slow to deliver the flexibility and functionality that users required. Our contention was that a radical shift was required in the development of software, “with a more demand-centric view, leading to software which will be delivered as a service within the framework of an open marketplace”.

Opening up the software industry

Thus the idea of ‘software as a service’ was conceived almost twenty years ago and for many users is now a reality; cloud computing for example, providing on-demand software priced on a pay-per-use basis. The software industry has undergone a revolution and change continues apace as development tools, such as App builders, are placed in the hands of enterprising youngsters, and a new generation of children are being introduced to software development through accessible languages such as those taught in codecademy.

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You don’t have to be Einstein to program

So what about the future?

Users have evolved from passive consumers to active participants; software has become more pervasive underpinning not only business but also social, governmental and entertainment applications. At the same time the IT, telecoms, media and entertainment industries have converged.

The future of software is no longer simply in the hands of the traditional software companies but is the concern of governments and society. Governments began asking questions about control and future economic value of the industry and in 2007 the World Economic Forum began working on scenarios for the future to help governments understand the policy and regulatory challenges. Possible scenarios were developed for the year 2015.

Scenarios for 2015: Key questions

  1. Who will lead/control social and economic value creation in the future? Industry or users and communities?
  1. Will the digital environment be: an open system or a closed system?

The chart shows 3 possible scenarios for 2015.

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Scenarios for 2015

Scenario 1: Safe Havens describes a digital world in which online security concerns create a clamour from consumers, businesses and governments for virtual safe havens. Industry responds by vertically integrating to create secure walled environments that provide all digital services. (industry controlled – closed environment)

Scenario 2: Middle Kingdoms describes a digital world in which consumers, governments and forward-looking businesses push for interoperability, enabling a bewilderingly wide array of niche offerings to become viable propositions – and a digital ecosystem dominated by intermediaries that effectively connect users to like-minded individuals and to their highly specialised suppliers that can best meet their needs. (industry controlled – open environment)

Scenario 3: Youniverse describes a digital world in which the rise of organic grassroots communities as powerhouses of economic value creation turns traditional business thinking on its head. This leads to the rise of new organisational structures and to digital experiences that are highly personalised. (organic and community led – open environment)

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Future Scenarios in more depth

This short 5 minute video explains the scenarios in more depth.

To some extent all three scenarios are in existence today with the community groups in scenario 3 being somewhat uncomfortable with the industry controlled, closed environment in scenario 1.  The winner in scenario 2 is the IT consultant who matches the wide range of offerings to the requirements of specific companies.

What happens next?

Recent major disruptors for the software industry include the rise of social media, the take-up of mobile devices, cloud computing and the growth of ‘big data’. According to Mark McCaffrey of PWC  ‘buyers and consumers of software are changing, they don’t want to buy software and they want it delivered over multiple channels’. They want to ‘use as you go’ with no investment upfront.

What happens next in the software industry depends on the next generation and it is heartening to see a growth in coding classes in local communities and total overhaul of the ICT curriculum in schools. Consumers are increasingly interacting via Apps which can be built by relatively inexperienced developers. it may be that the future for software as a service is not only ‘use as you go’ but also ‘design, build and use as you go’ !

Any comments gratefully received.

Involving Customers in Service Innovation

In this case study a medium-sized Finnish insurance company recognised that customers can be more than just recipients of innovation delivered by the provider; they can also be sources of innovation. Decisions about new services previously based on systematically gathered information were felt to be too product oriented so working with a team of researchers (details below) the company sought to develop a new approach that would involve customers in the innovation process. Several insurance services were  used to test the new process model.

customers not so happy! but can they innovate?

One of the test cases chosen was to develop next generation health insurance that would better correspond to the changing needs of healthcare. A series of workshops and a range of techniques were employed including:

  • Building a future-oriented concept of health insurance: two separate workshops were held; one for a group of customers, one for a group of company representatives and the differences in outcome compared.
  • Using readymade cards that illustrate twelve trends related to healthcare and asking customers to select three trends that they thought most important for health future insurance.
  • Concept formulation using physical materials (modelling pastes, sticks etc) to create a 3D model of the next generation health insurance for the year 2025.

The researchers noted that; “Interestingly, there was a clear difference in the ways in which the customers and the company built their concepts. The former concentrated on modelling their health related social network, whereas the latter built a network including customers as ‘members’ but controlled by the company”

One outcome from this process of ideation was that the workshops provided ‘completely new information’ for the company bringing forward issues that cannot be reached through more traditional methods.  Issues included:

  • “The versatility of customer situations in relation to the service
  • The ignorance of customers about the content of available services
  • The importance of solutions instead of detailed pieces of information
  • The significance of customer care throughout the lifespan of customership
  • The decisive role of service encounters when customers evaluate the success of the service”

So can customers help innovate or be part of the innovation process?

In this case customer involvement enabled the insurance company to gain valuable insights into customer issues which may influence the design of future insurance services.

Further information about the case and the resulting service innovation process model can be found in Involving Customers in the Service Innovation Process.

The researchers involved in this Case were:

Marja Toivonen, Director, VVT Technical Research Centre, Finland

Mari Holopainen and TiinaTuominen , BIT Research Centre, Aalto University, Finland

About this blog

Innovation is an exciting part of our everyday lives (or at least it should be!). The purpose of this blog is to share examples of innovation and to celebrate achievements of design and technology in creating new services and influencing our future.

Welcome!

I hope you will enjoy the blog and share your knowledge and experience.

Initially the main topics will be:

Service Innovation Cases: real life examples of innovation together with links to further resources for those wishing to learn more. Examples from all sectors and of all types will be included.

Technology: almost every day it seems we hear of some exciting new technology that could enhance existing services or help create new ones. The blog will highlight these.

Service Innovators: the blog will recognise practitioners and researchers who have contributed to service innovation as community builders, leaders, researchers or technical innovators. I have met some wonderful service innovators and with your help together we can ‘meet’ even more.

Books and resources: Books and other resources that will help us learn more.

Please do email me if you have any suggestions for inclusion under cases, technology, innovators or resources, or any other comment you wish to make.

Guest blogs also welcome.

Email: info@lindamacaulay.com

Linda

About me

My name is Linda A Macaulay and I am Emeritus Professor at the University of Manchester, UK.  I have always been interested in computers and associated technologies and in how they are used in practice. My early experience as a programmer and system designer in the UK health service impressed on me the importance of designing IT systems that people can actually use. Since then I have had many assignments with business and public sector organisations and see the importance of aligning people, process and technology towards customer/user needs. The heady days of e-commerce at the turn of the millennium and the e-business revolution that followed have opened up new and exciting ways of serving customer needs. The customer can now be part of the design process; can collaborate with others to design and innovate and with social media can create their own services.  The picture is continually changing and I believe there is much to be learnt from seeing examples of what is happening in practice now and what technology might allow us to do in the future, and hence the focus of this blog is on case studies of service innovation.

For further information about me see www.lindamacaulay.com